For the Week of November 04, 2013
The Trade Spotlight advisory service applies the GBE trading methodology (buying or selling commodity contracts based on breakouts of chart formations and technical indicators) to identify one to two trade setups per week.
Highlighting This Week’s Potential Breakouts:
The December 2013 British Pound contract is set up in a 1-2-3 Top Formation. The twelve-month contract high, and number one point of the formation, is 1.6252 (10/01/13). The contract traded lower to 1.5886 (10/16/13), setting up the number two point of the formation. From there the contract rallied to setup the number three point of the formation at 1.6250 (10/23/13). That high did not surpass the twelve-month contract high, setting up a Double Top Formation as well in the process. The Trend Seeker (A US Chart Company tool to help identify market trend) is currently Neutral. The 1-2-3 Top Formation is a trend reversal formation, so the Trend Seeker may only change if a breakout and continuation occurs. The MACD, a trend indicator, crossed over bearish above the baseline. Stochastics, a Momentum indicator, is in “over sold” territory though. The 50% Fibonacci Retracement of the September rally is 1.5836, this level may act as support. One potential target is the low of 1.5420 (8/28/13), the beginning of the September rally.
The December 2013 Soybean Oil contract is setup for a trade to the upside. The contract was setup in a 1-2-3 Bottom Formation but failed continuation in its breakout. The twelve-month contract low and number one point of the formation was 39.20 (10/02/13). The contract rallied to 42.09 (10/21/13), setting up the number two point of the formation. From there the contract sold-off to setup the number three point of the formation at 40.31 (10/23/13). On 10/31, the contract traded through the number one point of the formation, trading as high as 42.12. However there was no follow-through, as the contract closed lower on the day at 41.33. At the time the MACD indicator, a trend indicator, was bullish below the baseline. That is still the case. At the time the Stochastic indicator, a Momentum indicator, was neutral. It appears to pointed bearish now. The 20-day and 50-day Moving Averages are pointed bearish as well. The Trend Seeker (A US Chart Company tool to help identify market trend) is currently Down. Perhaps waiting on a close above the recent high and a change in the Trend Seeker will be a better a trigger for a long entry. A potential stop loss can go below recent contract lows at 41.03 (10/17/13). A potential upside target is the high of 45.32 (8/26/13).
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
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